This year's opium harvest will almost certainly be the largest ever. In the five years since the overthrow of the Taliban regime, land under cultivation for poppy has grown from 8,000 to 165,000 hectares.

The US wants to step up eradication programmes, crop-spraying from the air. But, desperate to win "hearts and minds" in Afghanistan and protect British troops, Tony Blair is on the brink of a U-turn that will set him on a collision course with President George Bush.

The Prime Minister has ordered a review of his counter-narcotics strategy - including the possibility of legalising some poppy production - after an extraordinary meeting with a Tory MP on Wednesday, The Independent on Sunday has learnt. Tobias Ellwood, a backbencher elected less than two years ago, has apparently succeeded where ministers and officials have failed in leading Mr Blair to consider a hugely significant switch in policy.

Supporters of the measure say it would not only curb an illegal drugs trade which supplies 80 per cent of the heroin on Britain's streets, but would hit the Taliban insurgency and help save the lives of British troops. Much of the legally produced drug could be used to alleviate a shortage of opiates for medicinal use in Britain and beyond, they say.

A Downing Street spokesman confirmed last night that Mr Blair is now considering whether to back a pilot project that would allow some farmers to produce and sell their crops legally to drugs companies.

...the links between drug warlords, terrorism and the Taliban are clear. Traffickers hold poor farmers in a form of bondage through the supply of credit, paid back in opium. Many of those fighting British troops during the winter months will return to their villages to harvest poppy crops in the spring and summer. The traffickers' huge profits help to fund the fight against NATO troops.

The White House has consistently rejected the idea that opium could help to solve Afghanistan's chronic poverty. But there are clear signs of a shift in international opinion towards allowing a legal trade. Pervez Musharraf, the President of Pakistan, has said that "buying the crop is an idea we could explore". He added: "We would need money from the US or the UN. But we could buy the whole crop and destroy it. In that way the poor growers would not suffer."

If Britain moves forward with this plan, President Bush will be faced with an exceedingly difficult decision: Confront the most important ally the US has, or betray a cause of vital importance to his conservative base, as well as to most of the US population.

While I am not quite comfortable recommending the legalization of hard drugs, I have long been of the opinion that the War on Drugs is a massive waste of resources. It is also clear that the War on Drugs reduces supply, which inflates prices, and leads to the violence endemic to the drug trade. Furthermore, since the drug trade is illegal, disputes between dealers cannot be settled in a court of law and must be "resolved" with violence. Legalizing drugs may create more addicts (although I'm not even convinced of this), but it would almost certainly drastically reduce drug-related violence.

The problem becomes even clearer in the context of the War on Terror. For many of the poor farmers in Afghanistan, poppy cultivation is one of the only avenues for economic opportunity available. As Christopher Hitchens noted a few years back:

...a third of Afghanistan's GDP depends on the crop and that "destroying that trade without offering our farmers a genuine alternative livelihood has the potential to undo the embryonic economic gains of the past three years." As he further emphasized, these highly undesirable consequences arise from the control of the trade by a "mafia" with links to Islamic nihilism.

Problem solving is rarely about the optimal solutions. Rather, it's about balancing scarce resources and trying to achieve positive outcomes. There's plenty of evidence that the War on Drugs hasn't been particularly effective and has cost this country billions of dollars and imprisoned large numbers of people for relatively minor crimes. But if the War on Drugs conflicts with putting an end to the Taliban and consolidating democracy and civil society in Afghanistan, it seems pretty clear what the choice should be.

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One consolidates democracy by building civil society, by developing institutions, rule of law, private property, and the other constituent parts of a healthy democratic society. Economic development and opportunity is a huge part of that process; if people have no jobs and no prospects, they're not usually interested in voting and democratic processes.